Supporters of Sen. Bernie Sanders’ “Medicare for all” bill imagine that my colleague Charles Blahous’ recent study “accidentally proved” that the “Medicare for all” Act would lower healthcare spending by $2 trillion over 10 years (2022-2031).
As the captain in “Cool Hand Luke” would say, “What we’ve got here is failure to communicate.”
Specifically, “Medicare for all” supporters fail to comprehend English grammar’s subjunctive conditional. Economists exacerbate the misunderstanding by saying “assume” when we really mean “pretend.” Here’s a brief grammar lesson:
The subjunctive mood describes something doubtful or wished-for. The conditional tense expresses an “if … then” relationship. Together, they say: “If [X were true], then [Y would result].”
For example: “If [Lester could bicycle from Boston to San Francisco at 300 miles per hour], then [his transcontinental bike ride would take 10 hours].”
The sentence is logically true, but pragmatically ridiculous. Logical truth doesn’t “prove the possibility of” or “accidentally make the case for” 10-hour transcontinental bike rides.
Blahous’ study, “The Costs of a National Single-Payer Healthcare System,” is essentially a 24-page subjunctive conditional, saying: “If [‘Medicare for all’ were implemented and it performed exactly as Sanders claims], then [total healthcare spending would drop by $2 trillion and federal government spending would rise by $32.6 trillion].”
The independent Vermont senator sarcastically thanked Blahous “for accidentally making the case for ‘Medicare for all’!” Headlines ensued: “Conservative Think Tank Says Medicare For All Would Save $2 Trillion,” “How a Libertarian Analyst Inadvertently Made a Good Case for Bernie Sanders’ Medicare for All,” “Conservative Think-Tanker Accidentally Argues That Single Payer Could Save Americans $2 Trillion.”
But Blahous doesn’t prove $2 trillion in savings any more than the earlier statement proves 10-hour transcontinental bike rides. Frankly, the odds of “Medicare for all” working as its supporters claim is about as likely as a 300-mile-per-hour bicycle ride.
Economists deserve some blame for imprudently “assuming” things when we mean “pretending.” Microeconomists “assume” people are rational, prompting noneconomists to roll their eyes at the perceived naivete. But economists actually mean, “Let’s pretend people are rational and then analyze how such people would behave.” Despite the unrealism of this assumption/pretension, doing so helps us understand much (but not all) real-world behavior.
Blahous’ study means, “Let’s pretend ‘Medicare for all’ does everything Sen. Sanders claims and see how spending would change.” Under such pretend conditions, total healthcare spending would decline modestly (3 percent — $2 trillion — over 10 years), but federal government obligations would mushroom to $32.6 trillion.
Blahous repeatedly notes that if Sanders’ bicycle can’t actually hit 300 miles per hour — that is, if “Medicare for all” fails to perform exactly as planned — the $2 trillion decrease flips to an indeterminate increase and the $32.6 trillion federal obligation could explode upward. The study’s abstract warns: “It is likely that the actual cost of [‘Medicare for all’] would be substantially greater.”
Even a $32.6 trillion increase would immediately, radically transform the relationship between Americans and their government. The federal government would have to double everyone’s income taxes and corporate taxes — and then find some extra money beyond that. Blahous notes private health insurance premiums would disappear, but that does nothing for, say, current Medicare retirees whose taxes on pensions, individual retirement account withdrawals, Social Security, investment income, and part-time jobs would likely double.
Consider other things Sanders’ kindred spirits assume (pretend?):
- “Medicare for all” would slash pay for doctors, nurses, hospitals, and others by around 40 percent. But even so, they’ll somehow work longer and harder than they do today, serving 30 million extra patients and providing the extra care Americans demand when deductibles and copays vanish and hearing, vision, and dental care become free.
- Drug and medical device manufacturers will take huge pay cuts, but they’ll still somehow produce the drugs and devices we expect.
- Hundreds of thousands of health insurance company employees, corporate healthcare specialists, and others will lose their jobs en masse, but they’ll somehow find employment — perhaps working for the greatly expanded government.
- Medicare’s administrators, currently processing claims for 60 million Americans, will have no trouble managing another quarter-billion beneficiaries.
The two big takeaways of this exercise are: First, don’t waste any time fantasizing about ways to spend that $2 trillion, and, second, if you need to travel from Boston to San Francisco, buy a plane ticket.
Robert Graboyes is a senior research fellow with the Mercatus Center at George Mason University, where he focuses on technological innovation in healthcare. He is the author of Fortress and Frontier in American Health Care and has taught health economics at five universities.
